How this plays out will not only affect retailers’ profits but also will greatly determine where the economy goes from here. Consumers make up about two-thirds of all economic activity, and they have helped keep the economy’s engines going in the years since the stock market’s collapse and the Sept. 11 attacks.

For more than a year, their buying has been expected to slow. But that has yet to happen, even though higher energy prices, among other things, have cut disposable income.

In fact, the all-important holiday season — which accounts for half the annual revenues for some retailers — turned out to be fairly healthy despite a slow start. Sales gains are expected to be a modest yet respectable 2.5 to 3 percent, according to the International Council of Shopping Centers.

Consumers haven’t given any indication they will change their ways in 2005.

A widely watched indicator of consumer confidence jumped in December to its highest level since July, with people clearly saying they are upbeat about the prospects for the next six months.

That’s not so surprising. As the economics team at Goldman Sachs notes in a recent report, there is still strength in the housing market, with prices up 56 percent in real terms since 1995.

In addition, oil prices are down more than 20 percent from a high of $55 a barrel reached in late October, and there are signs the labor market is improving.

Still, not everyone is convinced this shopping spree can continue.

Consider a research report by Merrill Lynch’s chief North American economist, David Rosenberg: “Consumer Outlook: Is This the Cat on its 9th Life?”

Rosenberg’s view is that the stimulus valves tapped by consumers in the past five years — such as low interest rates, tax breaks and the mortgage cash-out craze — are drying up. And there isn’t much left in the latest, maybe last valve, what he calls an “unprecedented drawdown” in personal savings.

While consumer spending has grown at a nearly 4 percent average annual rate during the last decade, the personal-savings rate has been tiny, averaging well under half a percent — a steep drop from the 5 percent back in 1995. That means consumers are spending virtually all of their income, though that figure does not factor in home appreciation or retirement savings.

And when Rosenberg looks back at historical data, he finds that after such a massive savings drop in the past, consumer spending tends to slow by nearly 2 percentage points in the next few quarters.

He also worries incomes are beginning to lag inflation. Real average weekly earnings fell 0.4 percent in November and are down 1.6 percent on a year-over-year basis, according to the Labor Department.

Outside of declines associated with weather-related incidents, that is the weakest trend since mid-1991 — and in the past, that led to six subsequent months of flat retail sales, Rosenberg said.

There is also concern about what a slowdown in the housing market could do to spending.

Much of the recent buying has been fueled by the perceived wealth consumers have experienced, thanks to the dramatic rise in home values. But what happens if housing prices soften and mortgage rates rise significantly?

Ultimately, the slowdown in spending might not be the choice of consumers. Should the economy’s engines kick into high gear, the Federal Reserve could tighten interest rates more rapidly to cool things down, and that could cause consumers to cut back.

Of course, no one should be too quick to write off consumers. They’ve proved themselves very resilient time and again.